Pakistan's oil industry has asked the government to change how petrol import costs in Pakistan are reflected in the pricing formula, warning that the current method can leave importers unable to recover what they actually paid for a cargo.
The Oil Companies Advisory Council has written to the Federal Secretary at the Ministry of Energy's Petroleum Division about the mechanism the federal government approved on 19 August 2026.
To be clear about what this is and is not: nobody has announced that petrol imports have stopped, and there is no shortage. The industry is warning that if the gap between what a cargo costs and what can be recovered persists, importing becomes commercially unattractive. That is a warning about an incentive, not a report of an interruption.
How the Petrol Import Pricing Formula Works
The formula leans on what Pakistan State Oil actually paid for its recent petrol cargoes. That is a sensible design: it ties the regulated price to a real transaction rather than an estimate, and the inputs are public — OGRA publishes notified petroleum prices, daily fuel price publications and the Platts data the calculation is built from.
What Happens When No Cargo Arrives in the Window
The mechanism looks back over the preceding rolling seven working days. If PSO has not taken a motor spirit import cargo in that period, there is no recent transaction to price from so the formula falls back to a calendar-year-to-date average of premium, incidentals and customs duty.
That fallback is the whole dispute. A year-to-date average is a backward-looking number. When international procurement costs climb sharply, an average that includes every cheap cargo since January will sit well below what the next shipment actually costs.
And a gap in PSO's shipping schedule is not hypothetical. The cargo windows cited are 13–15 October and 26–28 October — roughly eleven days in between with no fresh transaction for the formula to use.
Why International Petrol Premiums Matter
Premiums are the part of petrol import costs in Pakistan that moves most. A premium is what a buyer pays above the benchmark product price to actually secure a cargo, it tracks how tight the market is, and right now it has moved a long way.
| Reference | Premium / barrel | vs average |
|---|---|---|
| Calendar-year-to-date average (used by the formula) | ~$13.00 | — |
| Late-October cargo | $28.47 | 2.19× |
| Early-November cargo | $28.76 | 2.21× |
Reported cargo premiums. These are premiums only — not the landed cost of petrol, and not the retail price.
Two details in that table are worth pausing on. Both cargoes are about 2.2 times the average the formula would use — and they differ from each other by just $0.29, about 1%. Two consecutive shipments agreeing that closely, at more than double the year's average, says the premium has reset to a new level rather than spiked for one cargo.
OCAC Estimates a Rs16–17 Per Litre Recovery Gap
The industry's estimate is that applying the year-to-date average during that cargo gap leaves importers short by about Rs16 to Rs17 per litre. It is the industry's own figure, and it describes a cost-recovery shortfall — not a confirmed increase in what you pay at the pump.
We Checked That Number, and It Is Conservative
Here is the arithmetic, because it leads somewhere unexpected. The premium gap is $15.47 a barrel on the late-October cargo. A barrel is 158.987 litres, so that is $0.0973 per litre. At a recent interbank rate of about Rs277 to the dollar, that works out to roughly Rs27 per litre.
Which is about Rs10 more than the top of OCAC's own range.
So the Rs16–17 figure is clearly not a straight pass-through of the premium gap. The formula substitutes year-to-date averages for premium, incidentals and customs duty together, and the shortfall only applies to the volume lifted during that eleven-day window — so the industry's number is netted across all of it.
That is our arithmetic on the reported figures, not a claim by anyone involved. But it points one way: measured against the headline premium gap, OCAC has asked for less than the raw numbers would support. Anyone who multiplies the premium gap and concludes the industry is exaggerating has it backwards.
Could This Affect Petrol Supply in Pakistan?
About 70% of Pakistan's motor spirit comes from imports, with the remaining 30% or so from local refining. That share is why a pricing argument between the industry and the regulator is a supply question rather than an accounting one.
The mechanism is how importers get paid back for what they buy. If a company expects to lose money on a cargo, the rational response is to not arrange the next one — and at 70% import dependence, there is no large domestic cushion to absorb that.
That said, nothing has happened yet. Whether any of this touches availability depends on future purchasing decisions, stock levels, other supply sources and what the government does next. Treat this as a risk being flagged early, which is the responsible way to read an industry warning — not as a reason to queue at a filling station. For what you are actually paying today, see our latest petrol and diesel rates in Pakistan.
What Change Is the Oil Industry Seeking?
OCAC's proposal is narrow. When PSO has no cargo inside the seven-working-day window, use the premium, incidentals, customs duty and exchange-rate adjustment from PSO's most recent actual cargo instead of the year-to-date average.
In the council's words, that would be “straightforward, transparent and directly linked to an actual market transaction”. It is worth noting what it is not asking for: no subsidy, no change to tax rates, and no departure from the principle of pricing off a real purchase. It wants the most recent real purchase used instead of a historical blend.
The counter-argument the government has to weigh is just as real. A single most-recent cargo is more volatile than a year's average, and in a falling market the same change would hand importers a windfall rather than a shortfall. Averages exist to smooth exactly that. Whichever way this is settled, it sits alongside the wider questions in the Pakistan Auto Policy 2026-31 latest update about how much of a cost the state absorbs and how much it passes on.
What Happens Next
The decision rests with the Petroleum Division and the regulator, and until one of them acts this remains an industry request rather than an approved change. Two things are worth knowing if you want to follow it rather than wait for headlines. OCAC has not published the letter on its own website, so everything known about its contents comes through reporting rather than from the source which is a reason to treat the Rs16–17 figure as an estimate under discussion. The proposal itself sits with the Ministry of Energy's Petroleum Division. We will update this article when a decision is announced, and you can find the rest of our coverage in Asad Autos automotive news and updates.
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